COVID-19 Rental agreements

Dear clients,

With the aim of rigorously attend to the needs that may arise, we briefly explain below the possible consequences that the declaration of the state of alarm has in the field of legal relationships under private law, specifically, those relating to real estate’s rental agreements.

Firstly, although the press has announced on several occasions that specific measures will be taken in future meetings of the Council of Ministers to establish deadlines for the payment of rents for houses or commercial premises for those groups affected by the health crisis, these measures have not yet been finalized and are pending on approval.

Given the situation generated by COVID-19, in the context of contractual relationships, we can find situations in which;

  • Any of the parties is unable to comply with the contract or the obligation assumed, or that the accomplishment of the obligation is difficult or extremely burdensome,
  • In other cases, the object of the contract may have become impossible to fulfil, or the service may not be carried out as a result of the restrictions on mobility or other rights derived from the state of alarm.

These situations can happen both in relations with clients and / or suppliers, and in the scope of rental of premises or offices.

It is worth mentioning that the impossibility of compliance, due to circumstances such as these, could be considered a cause of force majeure.

Under this circumstance, in addition to the faculty of the lessee to terminate the contract, the one who is unable to make the payment of the rent, as long as he/she can prove the impossibility, will not be held responsible for the breach and, therefore, will not be liable for the damages and losses caused. However, the lessee will continue to be obliged to fulfil his/her obligation when the cause of force majeure disappears.

In the event that an agreement is not reached between the parties, the modification of the terms, conditions or terms of the lease could be defended, now in court, in order to compensate the imbalance between the benefits.

It will be essential to have the necessary documentation in order to prove each particular situation, the existing difficulties that prevent the accomplishment of the contractual obligations, as well as the exact terms of the signed contract.

The aforementioned solutions must be analyzed in detail in each of the assumptions that arise, since the contractual circumstances may vary significantly.

Our professional team is at your disposal in order to evaluate your particular situation and propose the measures that best suit your needs in the current economic situation.

Kind regards,

CABRERA RODRIGUEZ ABOGADOS Y ASESORES TRIBUTARIOS

Partner of ETL GLOBAL